National Litigation Hotline

On appeal, the Eleventh Circuit affirmed the trial court's decision with respect to the plaintiffs' RICO claims but also found that they could not pursue an “unjust enrichment” claim against the company. “What is clear from the complaint is that each member of the enterprise is allegedly reaping a large economic benefit from Mohawk's employment of illegal workers,” the court wrote. “Because the complaint clearly alleges that the members of the enterprise stand to gain sufficient financial benefits from Mohawk's widespread employment and harboring of illegal workers, the plaintiffs have properly alleged a 'common purpose' for the purposes of RICO.” To avoid dismissal, the court noted, the plaintiffs merely had the burden of alleging “conduct of an enterprise through a pattern of racketeering activity.” Here, the court found, the plaintiffs had done so. The Eleventh Circuit held that there was evidence that Mohawk and the recruiters worked together to recruit illegal workers and that they therefore had a “common purpose” in doing so. The court also recognized that courts are split as to what constitutes a “common purpose,” noting that the Seventh Circuit had determined, under similar circumstances, that an employer and recruiter lacked a common purpose because they had different objectives and rationales for their work. Here, however, the court found sufficient the plaintiffs' allegations that Mohawk worked in concert with the other businesses to hire and retain illegal workers for the purpose of reducing wages.

Class May Pursue Claims Against Company That Hired Illegal Workers to Lower Wages

The U.S. Court of Appeals for the Eleventh Circuit has held that a class of employees alleging that defendant Mohawk Industries hired illegal workers in a conspiracy to lower wages for all employees and cut back on workers' compensation claims may proceed with their lawsuit. Williams v. Mohawk Indus. Inc., 2005 WL 1355512 (11th Cir. June 9).

Four Mohawk employees filed suit in early 2004 on behalf of a potential class of nearly 1000 hourly employees against Mohawk, alleging that the company and third-party temporary staffing agencies and recruiters engaged in conspiracy to violate federal law. Specifically, the employees claimed that Mohawk and the other entities conspired within the meaning of the federal Racketeer Influenced and Corrupt Organizations Act (RICO),to violate immigration laws by harboring illegal workers, destroying documentation, and accepting false documents (such as fake drivers licenses) from job applicants as proof of employment eligibility. Some illegal workers who left the company were urged by Mohawk to return; others who had left returned to Mohawk under different names. The workers further alleged that the purpose of the conspiracy was to suppress wages and reduce workers' compensation costs at the company's Summerville, GA, plant. Mohawk moved to dismiss the plaintiffs' conspiracy claims, but the trial court refused. The trial court also permitted the plaintiffs to proceed with an unjust enrichment claim based on wages and dismissed a claim relating to unjust enrichment arising out of the employees' workers' compensation allegations. Mohawk appealed the decision of the trial court.

On appeal, the Eleventh Circuit affirmed the trial court's decision with respect to the plaintiffs' RICO claims but also found that they could not pursue an “unjust enrichment” claim against the company. “What is clear from the complaint is that each member of the enterprise is allegedly reaping a large economic benefit from Mohawk's employment of illegal workers,” the court wrote. “Because the complaint clearly alleges that the members of the enterprise stand to gain sufficient financial benefits from Mohawk's widespread employment and harboring of illegal workers, the plaintiffs have properly alleged a 'common purpose' for the purposes of RICO.” To avoid dismissal, the court noted, the plaintiffs merely had the burden of alleging “conduct of an enterprise through a pattern of racketeering activity.” Here, the court found, the plaintiffs had done so. The Eleventh Circuit held that there was evidence that Mohawk and the recruiters worked together to recruit illegal workers and that they therefore had a “common purpose” in doing so. The court also recognized that courts are split as to what constitutes a “common purpose,” noting that the Seventh Circuit had determined, under similar circumstances, that an employer and recruiter lacked a common purpose because they had different objectives and rationales for their work. Here, however, the court found sufficient the plaintiffs' allegations that Mohawk worked in concert with the other businesses to hire and retain illegal workers for the purpose of reducing wages.